Seasoning Requirements Explained

Seasoning is the minimum time a borrower must own a property before a lender will refinance based on appraised value rather than cost basis. It is the most misunderstood constraint in BRRRR — and the one most likely to trap capital in a deal when investors don't plan for it.

How Seasoning Affects Your Refinance

The impact depends on your timeline:

Under 3 Months

Most lenders will not refinance based on appraised value this early. Instead, they use the lower of ARV or cost basis (purchase price + rehab). The LTV is typically capped at 70%. This dramatically reduces your cash recovery if you added significant value through rehab.

3-6 Months

Some DSCR lenders will use ARV at this stage, but may still cap LTV at 70% instead of the standard 75%. Your refinance amount improves but isn't optimal.

6+ Months

Full ARV-based refinance is available from most lenders. Standard LTV (typically 75%) applies. This is the sweet spot for BRRRR — full value captured.

The Cost Basis Trap

Here's a concrete example of why seasoning matters:

Purchase price: $100,000
Rehab cost: $35,000
Cost basis: $135,000
ARV: $200,000

At 6+ months (ARV-based): Loan = $200,000 x 75% = $150,000. After paying off the purchase loan and refi closing costs, you recover most of your capital.

Under 3 months (cost-basis):Loan = $135,000 x 70% = $94,500. That's $55,500 less. The value you created through rehab is invisible to the lender — your capital stays trapped.

Planning Around Seasoning

Factor seasoning into your carrying cost calculations from day one
Start the refinance application before seasoning completes (underwriting takes 30-45 days)
Use the seasoning period productively — tenant placement, stabilization
Some lenders have no seasoning requirement for DSCR loans — shop around, but expect higher rates
The Rabbyt calculator models all three seasoning tiers automatically